Category Archives: Research and Innovation

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General provisions, Programmes and initiatives
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Reform of the common agricultural policy

Reform of the common agricultural policy

Outline of the Community (European Union) legislation about Reform of the common agricultural policy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

Reform of the common agricultural policy (CAP)

Since its inception, the common agricultural policy has had to adapt a great deal in order to meet the challenges with which it has been faced over the years: in the early days it concentrated on attaining the goals set out in Article 39 of the Treaty, securing a fair standard of living for the agricultural community and ensuring security of supply at affordable prices, and then it had to control quantitative imbalances. Finally it embarked on a new approach based on a combination of lowering institutional prices and making compensatory payments. The aim of the new CAP reform is to deepen and widen the 1992 reform by replacing price support measures with direct aid payments and accompanying this process by a consistent rural policy.

The new challenges

New internal and external challenges have now arisen:

  • strong growth is predicted on the world agricultural market with prices offering a good rate of return. The current level of CAP prices is too high for the EU to meet international undertakings and to be able to take advantage of the expansion of world markets, with the risk that surpluses will appear again and create intolerable budget costs, and market share may be lost within the Community and on the world level;
  • agricultural support is distributed somewhat unequally between regions and producers, resulting in poor countryside planning: a decline in agriculture in some regions and overly intensive farming practices in others, generating pollution, animal diseases and poorer food safety;
  • making the CAP more acceptable to the average citizen, to the consumer, is a key task;
  • the strength of the agricultural sector in the Union rests on its diversity: its natural resources, its farming methods, its competitiveness and income levels, and also its traditions. With successive enlargements, the management of the CAP has become far too complex and bureaucratic, and sometimes even almost impossible to understand. A new, more decentralised model has, therefore, to be developed which grants the Member States greater freedom without any risk of distorting competition or renationalising the CAP but with shared, clear ground rules and rigorous controls;
  • the Union has to prepare its agricultural sector for international negotiations and define the limits of what it finds acceptable;
  • enlargement makes market management and simplification measures even more necessary as the economies in the applicant countries are still heavily dependent on agriculture.

The responses

The agreement reached at the European Council in Berlin responds to the key Agenda 2000 proposals, giving concrete shape to a European model for agriculture in the years ahead.

The Berlin European Council reaffirmed that the content of the reform will secure a multifunctional, sustainable and competitive agriculture throughout Europe, including in regions facing particular difficulties. It will also be able to maintain the landscape and the countryside, make a key contribution to the vitality of rural communities and respond to consumer concerns and demands regarding food quality and safety, environmental protection and maintaining animal welfare standards.

The Commission’s proposals adopted by the European Council were based on the 1992 reforms which successfully reduced surpluses and controlled expenditure without compromising an average 4.5 % rise in income. This general trend has been confirmed by the European Council in the following guidelines.

  • Continued competitiveness should be ensured by sufficiently large price cuts that will guarantee growth of home-market outlets and increased participation by Community agriculture in the world market. These price reductions are offset by an increase in direct aid payments in order to safeguard the income level.
  • There is to be a new division of functions between the Commission and the Member States, whether concerning compensation in the form of direct payments or rural development measures incorporated into an overall programming framework.
  • This new decentralisation is logically accompanied by a major effort at simplifying the rules, such as the new rural development Regulation, which does away with a large number of regulations, or the market-management regulations, in particular the one on arable crops. Legislation is now clearer, more transparent and easier to access, with red tape for farmers cut to the strict minimum.
  • Rural development becomes the second pillar of the CAP. For the first time, the foundations have been laid for a comprehensive and consistent rural development policy whose task will be to supplement market management by ensuring that agricultural expenditure is devoted more than in the past to spatial development and nature conservancy, the establishment of young farmers, etc. The Member States will be able to vary, i.e. downwards, the direct aids awarded to holdings in line with criteria to be defined by each Member State relating to the amount of labour employed on a farm. Money released in this way is to be allocated by the Member State to agri-environmental schemes.

Beef and veal

The effects of the 1996 crisis on beef and veal consumption should ease. If there is no change in market policy, production should soon creep back up to its maximum potential after 2001, while consumption is set to decline in the long term. Over-production cannot be solved by slaughtering young calves, nor by imposing quotas limiting the number of animals or production levels.

The new Regulation cuts effective market support. It should be possible to stabilise market prices with the aid of protective measures at the Community’s external frontiers and measures relating to exports, and by introducing a private storage scheme similar to that for pigmeat.

Farmers will undoubtedly suffer losses of income which they should be able to offset by adapting production methods and investments. In return, they will be granted direct income payments by head of cattle, which will be increased gradually.

A number of simplifications have been made in the beef and veal sector, such as the abolition of the marketing system and the processing premium for veal calves. The intervention scheme will apply only in severe crises. Finally, the new Regulation repeals a number of other Regulations.

Milk and milk products

The Regulation establishes a new common market organisation for dairy products. It remains based on intervention and public storage of butter and skimmed-milk powder as well as certain aid schemes and marketing measures. Intervention prices for butter and skimmed milk powder are to be cut from the marketing year 2005/06 to improve competitiveness on both internal and external markets. As for internal market aid measures, a number of Regulations have been repealed, resulting in a major simplification of the legislation in this sector.

The new system is to extend the quota scheme until 2007/08, in order to gradually reduce internal and external consumer prices. The total reference quantity has been increased and the additional quantity will be allocated to Greece, Italy, Spain, Ireland and Northern Ireland.

Tobacco, olive oil and wine

In December 1996 the Commission presented a report on the tobacco regime to the Council and the Parliament, giving a positive assessment of the 1992 reform and proposing extending it along the same guidelines. In February 1997, the Commission presented a report on the olive oil regime, in which it suggested replacing price support with direct aid payments and a radical simplification of these payments. The new regime takes account of the proposals in both of these reports.

For wine, a reform proposal had been pending at Council level since 1994. Developments in the sector have largely been influenced by the Uruguay Round agreement. The new Regulation follows the guidelines laid down in the 1995 “agricultural strategy document”. The new Regulation replaces 23 Council Regulations previously in force, thus clarifying the system immensely and facilitating more direct access to the legislation.

The ban on planting vines has been maintained and will be operated flexibly to allow development of wine production where there is growing demand. The grubbing measures have also been maintained, although targeted more specifically at regions with serious and persistent structural surpluses. Intervention will be eliminated, while a “crisis distillation” mechanism will be introduced to deal with exceptional cases of market disturbance.

Lastly, the Regulation officially recognises the potential role of producer groups and inter-branch organisations, and it provides for major adjustments to the designation and presentation of wine sector products to ensure that consumers are better informed.

Arable crops

The intervention price for arable crops has been cut. The Regulation provides for an increase in direct payments for cereals and silage maize in two steps, from EUR 54 to EUR 63 per tonne. Payments for oilseeds and non-textile linseed are to be progressively reduced in three stages to the same level as cereals. Protein crops will receive a direct payment of EUR 72.5 per tonne, thus ensuring their profitability in relation to other arable crops. The special scheme for durum wheat is to be continued.

Compulsory set-aside has been retained, and voluntary set-aside is still allowed: it has, however, been made more effective and should have a more positive impact on the environment. The level of compensation for set-aside, both compulsory and voluntary, will be the same as for cereals.

Although the essential elements of the existing regime (in particular the base areas, the regionalisation scheme, the link to historic yields and the set-aside provisions) have been retained, major simplifications have been achieved.

Rural policy

The accompanying measures previously financed by the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) have been complemented by aid for less-favoured areas and areas whose development is lagging behind. All these measures have been applied horizontally and implemented in a decentralised manner. For rural areas eligible under Objective 1 of the Structural Funds the current system will be maintained. In rural areas eligible under the new Objective 2 (former Objectives 5(a) and 5(b)), measures are financed under the EAGGF Guarantee Section. Objective 2 is financed through the intermediary of the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Financial Instrument for Fisheries Guidance (FIFG). Any measures in favour of rural areas that are not eligible under the Structural Funds are part-financed under the EAGGF Guarantee Section.

To improve integration of environmental objectives in the common market organisations, the new reform enables Member States to make direct aid payments conditional on compliance with environmental provisions.

More specifically, the measures aim to:

  • strengthen the agricultural and forestry sectors by trying to promote quality agricultural products. The reform includes measures concerning the establishment of young farmers and conditions for taking early retirement;
  • improve the competitiveness of rural areas with the aim above all of improving the quality of life of rural communities and creating new sources of income for farmers and their families;
  • preserve the environment and European rural heritage via agri-environmental measures such as organic farming. To help the further ‘greening’ of the CAP, the traditional compensatory allowances in support of farming in less-favoured areas will be extended to areas where farming is restricted by the existence of specific environmental constraints.

Member States must, however, ensure that farmers are able to demonstrate that they do not exercise activities solely for the purpose of obtaining the benefit of support payments.

The financial framework

The new financial framework must cover the development of the CAP and the effects of enlargement in a coherent fashion and within reasonable budget limits, for a sufficient length of time. At the same time, it must finance key needs and ensure sound management of public funds. A simplified and comprehensive agricultural policy can now make it clear that the expenditure it involves is justified by the services which society at large expects farmers to provide.

The Berlin European Council considered that this reform could be implemented within a financial framework of an average level of EUR 40.5 billion plus EUR 14 billion over the period for rural development as well as veterinary and plant health measures. The reform aims at stabilising agricultural expenditure over the period while staying more in keeping with actual levels of spending.

In the light of these decisions, the European Council considered that the amounts to be entered in heading 1 of the financial perspective should be those indicated below. The Inter-institutional Agreement will ensure that all parties abide by this agreement.

Heading 1
(EUR million – 1999 prices)
CAP expenditure
(excluding rural development and accompanying measures)
Rural development and accompanying measures
2000
2001
2002
2003
2004
2005
2006
40 920
42 800
43 900
43 770
42 760
41 930
41 660
36 620
38 480
39 570
39 430
38 410
37 570
37 290
4 300
4 320
4 330
4 340
4 350
4 360
4 370

The agricultural guideline will also remain unchanged. It will be re-examined on the basis of a report which the Commission will present to the Council before the next enlargement of the European Union in order to make any adjustment considered necessary. The amount set aside in the financial perspective for the agricultural pre-accession instrument (EUR 250 million – 1999 prices) falls within the ceiling established by the guideline.

The European Council acknowledged the scale of the efforts being made to curb the budget and exercise rigour in implementing the common agricultural policy decided within the framework of Agenda 2000, the reduction in support prices being largely compensated by expenditure on the rural development budget and other accompanying measures (direct income aids, early retirement, aid to young farmers, etc.).

Preparations must be made for the accession of the applicant countries in accordance with the conclusions of the Luxembourg European Council in compliance with the horizontal pre-accession framework provided by a general coordination Regulation. The applicant countries are facing major difficulties in adapting to a rather complex Community acquis and completing the institutional process of privatisation and transformation of agricultural structures.

Concentrating on priority needs for agriculture, which remains a major source of employment, pre-accession measures concern in particular support for improving the efficiency of holdings and producer groups, processing and distribution, promotion of quality products, veterinary and phytosanitary control, land re-parcelling, water resource management, vocational training, environment, and the maintenance of rural heritage, etc.

Responding to the challenge of enlargement means giving a fresh boost to the development and integration of the European economy as a whole.

The efforts made, notably in terms of reducing support prices, represent an essential contribution by the European Community to stabilise the world’s agricultural markets. The European Council considers that the decisions adopted regarding the reform of the CAP within the framework of Agenda 2000 will constitute key elements in defining the Commission’s negotiating mandate for the future multilateral trade negotiations at the WTO.

Single Farm Payment

Single Farm Payment

Outline of the Community (European Union) legislation about Single Farm Payment

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

Single Farm Payment

Document or Iniciative

Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 [See amending act(s)].

Summary

Since the reform of the Common Agricultural Policy (CAP) which took place in June 2003, production-related support has been gradually abolished and included in the Single Payment Scheme (SPS), the system of direct payments which European farmers benefit from. This Regulation continues this reform.

Direct payments are support granted to farmers directly under the framework of one of the support schemes listed in Annex I to the Regulation. Some of this support is still directly linked to production; however the majority of direct support is decoupled and granted under the auspices of an income support scheme called the “Single Payment Scheme” (SPS). Under the SPS, support granted to farmers is not linked to production.

The objective of this Regulation is to gradually integrate support coupled with production into the single payment scheme.

DIRECT PAYMENTS

Cross-compliance

Direct support is subject to the principle of ‘cross-compliance’, according to which farmers must comply with a certain number of requirements in order to receive payments. These requirements relate to three areas:

  • public health, animal and plant health;
  • the environment;
  • animal welfare.

If the farmer does not comply with these requirements, they are penalised with a reduction in or cancellation of the direct payments.

Modulation

Modulation is a system of compulsory progressive reduction of direct payments. Direct payments of over EUR 5 000 have therefore been reduced year on year in accordance with a particular percentage of up to 10 % by 2012.

The corresponding amounts are transferred to the European Agricultural Fund for Rural Development (EAFRD) to enhance rural development programmes, in particular for measures concerning climate change, renewable energies, water management and biodiversity. The modulation system does not apply to either the outermost regions, the Aegean Islands or to Member States subject to “phasing in”.

Farm advisory system

Farmers may take part in the farm advisory system set up by Member States to advise farmers with regard to compliance with regulatory requirements on management matters and good farming and environmental conditions.

Integrated administration and control system (IACS)

Each Member State must set up an integrated administration and control system which enables the efficiency and monitoring of the support granted to farmers by the EU to be improved. Through this electronic system, the Member State is able to deal with aid applications and be assured through administrative checks and on-site checks that payments are made properly, in order to prevent and, if necessary, manage irregularities and recover undue amounts.

Payment

Full payments are to be made to beneficiaries in one or two instalments per year between 1 December and 30 June of the following calendar year. The Commission may authorise advances. Farmers who have artificially created the conditions required for obtaining payments will not receive them.

SINGLE PAYMENT SCHEME

The single payment scheme allocates aid to farmers irrespective of their production. The principal aim of this system of support is to ensure greater income stability for farmers. The latter henceforth receive the same amount of support regardless of their rate of production. This enables them to align their production with market demands. The aim of the Single Payment Scheme is also to improve the competitiveness and sustainability of agriculture.

National ceilings

Budget ceilings for the Single Payment Scheme for each Member State are published each year in a Commission Regulation.

National reserve

Member States set up a national reserve to grant rights to payments to new farmers and to those deemed to be in special circumstances, and to establish rights for farmers in areas subject to restructuring and/or development programmes.

Payment entitlements

In order to benefit from the Single Payment Scheme, farmers must first have payment entitlements, which they must declare together with the eligible hectares. The payment entitlements may be transferred from one farmer to another under certain conditions.

Historic implementation

In the “historic model”, entitlements are calculated based on the amount of direct payments each farmer has received during a reference period (generally the years 2000, 2001 and 2002. Other calculation options are possible in specific cases or when other integrations are concerned). Each direct payment is calculated by dividing the reference amount by the number of hectares which are entitled to the support received.

Regional implementation

Member States may opt to allocate payments at regional level. In that case, regional ceilings are to be established and divided among the farmers in the region. The value of their entitlements is obtained by dividing the financial envelope by the number of hectares declared in the first year of application of the scheme.

Partial implementation

Member States have had the option of partially implementing the single payment system. In this case, Member States keep part of the coupled aid and pay it to farmers in the form of a supplementary payment and according to production. These options will disappear in 2012, except for sheep/goats and suckler cows, two productions which may prove to be crucial in order to avoid agricultural land being abandoned in certain regions.

CONTEXT

This Regulation forms part of the “health check” component of the Common Agricultural Policy after the 2003 reform. Since then the CAP has been resolutely aimed at simplification by making most payments directly to farmers under the Single Payment Scheme. Using the experience acquired since the introduction of the SPS, the Commission is extending the simplification of the CAP into the area of cross-compliance and that of existing coupled aid.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 73/2009

1.2.2009

OJ L 30, 31.1.2009

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 1250/2009

22.12.2009

OJ L 338, 19.12.2009

A simplified CAP for Europe

A simplified CAP for Europe

Outline of the Community (European Union) legislation about A simplified CAP for Europe

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

A simplified CAP for Europe

Document or Iniciative

Communication from the Commission to the European Parliament and the Council of 18 March 2009 – A simplified CAP for Europe – A success for all [COM(2009) 128 final – Not published in the Official Journal].

Summary

Since 2005 the Commission has taken on a number of activities which have simplified the Common Agricultural Policy (CAP) from a technical * and policy * perspective.

Technical simplification

The main technical simplifications concern:

  • the repeal of legal acts deemed to be obsolete;
  • the adoption of the Regulation establishing a common organisation of agricultural markets in 2007, better known as the ‘single CMO’. This new Regulation replaces 21 individual common organisations of the market and groups them together into one single regulation;
  • the modification and streamlining of the policy on State aid, including the adoption of the de minimis Regulation in the agricultural sector in 2007;
  • a study to measure administrative costs;
  • the creation of platforms for the sharing of best practices concerning CAP simplification.

Policy simplification

The policy-related actions concern:

  • the sugar CMO reform, which merged the various quota types into one single quota. This reform also included the budget for sugar-aid into the envelope of the Single Payment Scheme and replaced intervention by private storage;
  • the Single Payment Scheme, to make it more “farmer friendly” and to simplify its functioning;
  • reforms in the fruit and vegetables and wine sectors, which integrated these sectors into the Single Payment Scheme;
  • impact assessments and evaluations, which involve stakeholders at an early stage of the legislative process and render it more transparent. They also improve the quality of proposals and the quality of debates on proposals.

Processes followed for CAP simplification

  • stakeholder consultation, screening, Action Plan;
  • the conference organised in October 2006;
  • internal training on legislative drafting;
  • IT systems: the ISAMM system (Information System for Agricultural Market Management and Monitoring) to facilitate the electronic exchange of information between Commission services and Member States is in its final development phase.

CAP simplification Action Plan

Launched at the end of 2006, the Action Plan is based on suggestions from Member States, stakeholders, producers’ organisations and the Commission. The plan had evolved to around fifty technical simplification projects by January 2009, of which 43 have been implemented.

The projects taken up concern, in particular:

  • the abolition of licences for exports of beef without export refunds;
  • egg marketing standards;
  • the abolition of the requirement that farmers should have a parcel at their disposal for at least 10 months before being able to apply for direct payments;
  • the elimination of most of the obligations relating to import and export licences;
  • specific marketing standards concerning 26 types of fruit and vegetables;
  • an amendment of the rules on cross-compliance * (for example, advance notice for on-the-spot checks); etc.

Special focus

An important accomplishment within the context of legislative simplification of the CAP was the adoption of the Council Regulation establishing a common organisation of agricultural markets, commonly referred to as the “single CMO”. The new Regulation replaces all 21 individual common organisations of the market and groups them together into one single regulation, thereby reducing the number of articles from around 920 to around 230 and repealing a total of 78 Council acts. Finally, the single CMO facilitates further simplification and reduction of administrative burden at the level of Commission implementing provisions.

Within the context of the Action Programme for reducing Administrative Burdens, a study assessing the administrative burden on farms arising from CAP was published at the end of 2007. This study, carried out in Denmark, Germany, France, Ireland and Italy, provides an assessment of the administrative costs associated with the Single Payment Scheme in 2006 and presents an outlook on future developments. The results of the study indicate that administrative burden on farms will decrease substantially. One factor is the learning curve effect and the disappearance of the administrative costs associated with the start-up of the Single Payment Scheme. The changes decided in the Health Check are another important reason.

The Health Check of the CAP reform simplifies the provisions of the Single Payment Scheme and renders the 2003 CAP reform more efficient. In particular, it stresses the need for further decoupling of support and the abolition of several schemes such as payments for energy crops and durum wheat, etc. to reduce the administrative burden on farms. The Health Check has also simplified the rules on the modulation franchise * as well as the provisions concerning the functioning of the National Reserve and payment entitlements that originate from that reserve.

Outlook

The actions under consideration concern:

  • common starting dates for legal acts;
  • communication and conservation of information;
  • a training programme for officials which involves a farm stay;
  • harmonising cross-compliance rules;
  • improvements in quality policy;
  • more regular review of legislation;
  • continuation of the Action Plan with the addition of new projects;
  • training on writing skills, to make legislation easier to read;
  • continuation of sharing best practices.

Context

This Communication takes stock of the activities carried out since the 2005 Communication on CAP simplification. As a result of the progress made in simplifying the Common Agricultural Policy, the Commission expects to achieve its objective of reducing administrative burdens by 25% by 2012.

Key terms of the Act
  • Technical simplification: implies revision of the legal framework, administrative procedures and management mechanisms to achieve streamlining and greater cost-effectiveness and attain existing policy objectives more effectively, without changing the underlying policies.
  • Policy simplification: reduces complexity through improvements to the agricultural support and rural development policy instruments. It may be described as ‘policy development with simplification implications’.
  • Cross-compliance: the payment of certain European aid is subject to compliance with basic environmental and health requirements.
  • Modulation: an instrument introduced by the 2003 reform which allows resources intended for direct aid to farmers to be transferred to rural development measures during the period up to 2013.

The CAP towards 2020

The CAP towards 2020

Outline of the Community (European Union) legislation about The CAP towards 2020

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

The CAP towards 2020

Document or Iniciative

Communication from the Commission of 18 November 2010 – The CAP towards 2020: Meeting the food, natural resources and territorial challenges of the future [COM(2010) 672 – Not published in the Official Journal].

Summary

This Communication identifies the challenges facing agriculture and the Common Agricultural Policy (CAP) in the coming years. These challenges have been identified based on past experience, the current economic situation and an extensive public debate organised in 2010.

Through this Communication, the Commission is launching themes for consideration, relating to the future of the CAP. It proposes to adapt the current CAP objectives to the new challenges which have been identified. In particular, the emphasis should be on strong, quality agricultural production, on protecting natural resources and on maintaining the agricultural sector in all EU territories.

Lastly, the Commission explains which instruments would enable the fixed objectives to be met. These instruments should enable the CAP to be greener, fairer, more efficient and more effective.

OBJECTIVES

Food security

Global demand will continue to increase in the coming decades. The EU must be in a position to respond. It is essential that the EU maintains and increases its production capacity.

European citizens want high quality and a wide choice of food products, reflecting high safety, quality and animal welfare standards. A strong agricultural sector is vital for the highly competitive food industry to remain an important part of the EU economy and trade (the EU is the leading world exporter of mostly processed and high value added agricultural products).

Natural resources

Agriculture can put pressure on the environment (water pollution, soil depletion, water shortages and loss of wildlife habitats), but it can also have positive effects (climate stability, biodiversity, landscapes and resilience to flooding).

The EU shall endeavour to limit the negative effects of agriculture and to encourage its positive contributions. The future CAP shall promote energy efficiency, carbon sequestration, biomass and renewable energy production and, more generally, innovation.

Balanced territorial development

Agriculture remains an essential driver of the rural economy in the majority of EU countries. It is necessary to maintain a competitive and dynamic agricultural sector which attracts young farmers in order to preserve the vitality and potential of rural Europe.

INSTRUMENTS

Direct payments

In order to achieve the objectives stated above, the Commission plans to adapt the direct payments system to ensure that payments are better distributed and targeted.

It is proposed that future direct payments should support farmers’ basic income through the granting of a basic decoupled direct payment, with an upper ceiling, targeting of ‘active farmers’, a simple support system for small farmers and the consideration of areas with specific natural constraints.

The Commission proposes to improve the grant criteria relating to the environment through a mandatory ‘greening’ component of direct payments targeted at agricultural practices which address climate change and environmental objectives (permanent pasture, green cover, crop rotation, ecological set-aside, etc.).

Market measures

The Commission specifies that the CAP should keep the overall market orientation of agriculture while also maintaining the management tools which have demonstrated the important role they play in times of crisis or disruption. In the coming years, certain agricultural markets must evolve, in particular the regime currently in place in the sugar sector which is due to expire in 2014/2015.

The Commission believes that more general measures must be taken in order to improve the functioning of the food supply chain, which should be more transparent and within which bargaining power should be more balanced.

Rural development policy

Lastly, the Commission highlights the importance of the rural development policy which the EU carries out through the CAP. It proposes to strengthen the environmental element and to improve coordination of this policy with other European policies.

The Commission proposes to focus on the competitiveness of agriculture by encouraging innovation, promoting good management of natural resources and supporting balanced territorial development balance by encouraging local initiatives.

As well as enhancing the promotion and quality optimisation tools, the Commission believes that a risk management toolkit should be included to deal more effectively with income uncertainties and market volatility.

Information measures relating to the common agricultural policy

Information measures relating to the common agricultural policy

Outline of the Community (European Union) legislation about Information measures relating to the common agricultural policy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

Information measures relating to the common agricultural policy

Document or Iniciative

Council Regulation (EC) No 814/2000 of 17 April 2000 on information measures relating to the common agricultural policy.

Summary

The aims of the information measures relating to the Common Agricultural Policy (CAP) are:

  • explaining, implementing and developing the CAP;
  • promoting the European model of agriculture and helping people to understand it;
  • informing farmers and other parties active in rural areas;
  • raising public awareness of the issues and objectives of the CAP.

The information measures are as follows:

  • specific or annual nformation measures such as talks, audiovisual productions, information campaigns, information stands at agricultural fairs, mobile workshops, etc. presented by organisations (legal persons) established in a Member State for at least two years, such as agricultural NGOs, consumers’ associations, public authorities, the media or universities.
  • activities implemented at the Commission’s initiative.

Measures covered by a legal obligation and those receiving funding under another Community action may not claim aid under this Regulation.

The Community cofinancing rate, under the European Agricultural Guarantee Fund (EAGF), generally amounts to 50% of the eligible costs. In special cases, it may be 75 %.

Events eligible for Community cofinancing for information measures in the field of the CAP include information measures such as televised debates, audiovisual productions, seminars, publications, participation in international events or information campaigns including several of the measures referred to above.

The Commission publishes a call for proposals in autumn each year (in 2009, publication took place on 9 September and proposals were to be submitted by 31 October).

Projects are selected on the basis of their quality and cost-effectiveness.

For measures to be cofinanced in 2010, the amount of funding is at least EUR 20 000 and at most EUR 200 000. The end of the evaluation procedure has been set at 30 April 2010 in the knowledge that the applications selected will be the subject of an agreement between the Commission and the recipients governing the rights and obligations arising from the Commission’s funding decision.

The European Commission monitors, checks on and analyses measures receiving Community funding.

The European Commission regularly issues a report on the implementation of information measures to the Parliament and to the Council.

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Regulation No 814/2000

17.4.2000

OJ L 100 of 17.4.2000.

Related Acts

Implementing procedures

Commission Regulation (EC) No 2208/2002 of 12 December 2002 laying down detailed rules for applying Council Regulation (EC) No 814/2000 on information measures relating to the common agricultural policy [Official Journal L 337 of 13.12.2002].
Amended by Regulation (EC) No 1820/2004 [Official Journal L 320 of 21.10.2004].

Risk and crisis management in agriculture

Risk and crisis management in agriculture

Outline of the Community (European Union) legislation about Risk and crisis management in agriculture

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

Risk and crisis management in agriculture

Document or Iniciative

Communication from the Commission to the Council of 9 March 2005 on risk and crisis management in agriculture [COM(2005) 74 final – Not published in the Official Journal].

Summary

In this communication, the Commission proposes the introduction of measures to help farmers to manage risk and improve their response to crises. It is proposing three categories of new measures.

New options for risk and crisis management tools

Risk * (resulting in a negative outcome) and crises * may have serious economic consequences for businesses, affecting their income. Most of the instruments devised to provide assistance to cope with unforeseeable events rely on ad hoc measures.

The Commission has examined a number of instruments to accompany or partially replace the existing ad hoc emergency measures. The three options proposed by the Commission are as follows:

  • insurance against natural disasters: this would involve the provision of a financial contribution towards the premiums paid by farmers for insurance against income loss as a result of natural disaster, bad weather or disease. This measure would encourage insurance in the sector, which up to now has been underdeveloped as a result of the systemic nature of the risks involved. Reinsurance schemes are also considered;
  • supporting mutual funds: mutual funds are a means of sharing risk among groups of producers, enabling farmers to be compensated in the event of loss. In the past, funds have usually been set up on the initiative of producer groups in the same sector. The Commission is proposing that the setting up of mutual funds in the agricultural sector be encouraged by granting temporary degressive aid for their administration;
  • providing basic coverage against income crises: new instruments could be created to provide basic coverage in the event of liquidity problems or serious loss of income. The reasoning is that, while rural development programmes will be available to support major investment in restructuring and provide aid for structural adjustments, they could prove insufficient.

Training measures could be introduced under the rural development programmes to help improve awareness of current risks and improve risk management strategies.

Safety net in the event of market crisis

The instruments used to influence the market and price situation and address possible crises vary between market organisations. Following the CAP reform, safety net provisions in the event of crisis remain available in several sectors covered by the reform. For other sectors, there is currently no justification for the introduction of an additional general safety net provision. The Commission therefore rules out the introduction of a safety net clause for each common market organisation.

Financing risk and crisis management measures

The Commission proposes that these additional risk and crisis management measures should be funded under the rural development programmes (under the competitiveness priority) out of one percentage point of modulation *. Using modulation would not require additional Community expenditure and would make it possible for the Member States to use a limited amount of rural development funds for these purposes. For the new Member States, in which modulation does not apply, a method enabling those so wishing to allocate funds to these measures will have to be examined.

The use of state aid or top-ups for this type of measure would be subject to the relevant Community competition rules.

Background

An initial analysis of risk management tools was presented by the Commission in January 2001. The conclusions of the Luxembourg Council (June 2003) on the reform of the CAP include a statement by the Commission on this matter, announcing that it would examine specific measures to address risks and crises by the end of 2004.

Key terms used in the act
  • Single payment scheme: the single payment is an annual income payment to farmers calculated on the basis of the aid received over the 2000-02 reference period. The main aim of this payment is to ensure greater income stability for farmers. Farmers are free to decide what they want to produce in response to demand without losing their entitlement to support.
  • Modulation: a mechanism to progressively reduce direct payments to farmers and transfer the funds thus released to the rural development sector.
  • Risk: implies a situation that could have a variety of outcomes, for each of which the probability can be estimated.
  • Crisis: an unforeseen situation that endangers the viability of agricultural holdings, either at local level or across a whole sector of production.

Mediterranean package

Mediterranean package

Outline of the Community (European Union) legislation about Mediterranean package

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

Mediterranean package

Document or Iniciative

Council Regulation (EC) No 864/2004 of 29 April 2004 amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the Common Agricultural Policy and establishing certain support schemes for farmers, and adapting it by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia to the European Union.

Summary

This Regulation, known as the “Mediterranean package”, supplements the major reform of the Common Agricultural Policy (CAP) of June 2003 with provisions relating to the integration of support for tobacco, hops, olive groves and cotton into the single payment scheme.

The Regulation establishes specific direct aid applicable to these sectors. This aid is granted on condition that farmers meet the cross-compliance requirements laid down by the 2003 reform.

Hops

Direct aid for hops has been decoupled from production since 1 January 2005 (except in countries which applied a transitional period until 31 December 2005). However, in order to deal with specific market situations or regional implications, Member States may retain a certain percentage of coupled aid (corresponding to a maximum of 25 % of their national ceiling *).

The reference amount for the calculation of the aid is EUR 480 per hectare for which aid was granted during the reference period 2000 to 2002.

The Regulation on the common organisation of the market in hops contains rules on marketing, producer groups and trade with third countries.

Cotton

Direct aid for cotton has been decoupled from production since 1 January 2006. However, in order to safeguard production in areas where cotton production would be liable to cease if decoupling were applied in full, Member States may retain a certain percentage of coupled aid (corresponding to a maximum of 35 % of the total amount of aid previously granted for cotton).

This aid is calculated according to the following table:

Maximum area (total)
440 000 hectares
Greece Spain Portugal
National base area

370 000 hectares

70 000 hectares

360 hectares

Aid in euros per eligible hectare

300 000 hectares at EUR 594 per hectare
70 000 hectares at EUR 342.85 per hectare

EUR 1 039 per hectare

EUR 556 per hectare

The “approved inter-branch organisations” in the cotton sector are encouraged to participate in the management of area aid for their members (fixing a scale).

Following the cancellation by the Court of Justice of the European Communities of the 2004 reform in September 2006, the current regulations governing the cotton sector will be replaced in the near future. In response to a very wide-ranging public consultation, stakeholders and the general public submitted contributions with a view to drawing up a new proposal for reform.

Olive oil

Support for the olive oil sector has been decoupled from production since 1 January 2006. However, for the upkeep of olive groves of environmental or social value, area aid (corresponding to a maximum of 40 % of the aid previously granted) is granted for olive groves recorded in the geographical information system *.

Only Spain decided to apply coupled aid for olive groves, amounting to EUR 103.14 million per annum.

Member States may assign no more than 10 % of their national envelope for olive oil to measures to improve quality.

The Regulation on the common organisation of the market in olive oil and table olives regulates the internal market and trade in these products with third countries.

Tobacco

Direct aid for tobacco will be fully decoupled from production from 2010. However, in order to protect local economies and to allow the market price to adjust to the new conditions, Member States may maintain a certain percentage of coupled aid (corresponding to a maximum of 60 % of the aid previously granted) for the four years up to 2010.

During this period, and depending on the choice made by the Member States concerned, the maximum amounts of this aid are as follows:

2006-2009
(EUR million)
Germany

21.287

Spain 70.599
France 48.217
Italy (apart from Puglia) 189.366
Portugal 8.468

A proportion of this production aid (set at 5 % in 2007) is transferred to the Community Tobacco Fund, which finances research and information programmes on the harmful effects of tobacco consumption.

From 2011, half the aid granted annually for tobacco between 2000 and 2002 (estimated at EUR 484 million) will be transferred for restructuring the tobacco-producing regions under rural development programmes financed under the European Agricultural Guidance and Guarantee Fund, EAGGF.

The Regulation on the common organisation of the market in tobacco regulates production orientation and trade with third countries.

Background

The “Mediterranean products” reform is based on the Commission communication to the Council and the European Parliament entitled “Accomplishing a sustainable agricultural model for Europe through the reformed CAP – the tobacco, olive oil, cotton and sugar sectors “. For hops, the reform is based on the report from the Commission to the Council on evolution of the hop sector .

Key terms used in the act
  • National ceiling: maximum amount which each State may allocate to direct aid payments.
  • Geographical information system: a computerised tool organising geographical data and providing a realistic representation of the spatial environment.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 864/2004 1.5.2004 OJ L 161 of 30.4.2004

Resources

See Also

Specific measures in favour of the smaller Aegean islands

Specific measures in favour of the smaller Aegean islands

Outline of the Community (European Union) legislation about Specific measures in favour of the smaller Aegean islands

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

Specific measures in favour of the smaller Aegean islands

Document or Iniciative

Council Regulation (EC) No 1405/2006 of 18 September 2006 laying down specific measures for agriculture in favour of the smaller Aegean islands and amending Regulation (EC) No 1782/2003 [See amending acts].

Summary

The smaller Aegean islands benefit from specific supply arrangements for certain agricultural products and adapted support measures for local agricultural production. These measures, exemplified by this Regulation, aim at promoting the development of these regions which is hindered by a number of geographical and economic factors.

Specific supply arrangements

Supply of agricultural products (a list of which can be found in Annex I of the treaty) that are essential for human consumption or for the manufacture of other products is based on a specific support policy. In this respect, the authorities designated by Greece establish a forecast supplybalance which quantifies annual needs for the products concerned. This forecast is then approved by the Commission.

The products benefit from supply aid which is fixed according to the additional marketing costs. Implementing the specific supply arrangements takes into account certain factors such as the particular needs of the smaller islands, traditional trade flows, the economic aspect of the aid envisaged and the development of local production.

Products covered by this scheme may only be re-exported under the conditions established by the Committee which assists the Commission. These conditions include the reimbursement of aid received. Moreover, products which are processed in the smaller islands using materials which have benefited from the specific supply arrangements may only be exported to third countries or sent to the Community within the maximum quantities defined by the Commission.

Measures in favour of local agricultural production

Greece presents a support programme which is submitted to the Commission for approval. This programme includes measures to foster agricultural production in the smaller islands. The measures must be coherent and compatible with Community legislation and policies, in particular the Common Agricultural Policy.

The support programme may include:

  • a quantified description of the situation as regards agricultural production;
  • the proposed strategy and expected impact in economic, environmental and social terms;
  • an implementation schedule for the measures and a general summary table describing the resources to be mobilised;
  • a justification of the compatibility and coherence of the various measures in the programme and a definition of the criteria and quantitative indicators used for monitoring and assessment;
  • action taken to ensure that the programme is implemented effectively and appropriately;
  • the competent authority designated to implement the programme and associated organisations.

Support measures

The Commission may authorise additional aid in the form of operating aid in the sectors of production, processing and marketing of the said products to implement the support programme.

Financial provisions

The specific supply arrangements and the measures fostering local agricultural production amount to a maximum of EUR 23.93 million per year. With regard to the specific supply arrangements, the maximum annual amount is EUR 5.47 million.

General provisions

The Commission is assisted by the Management Committee for Direct Payments.

Greece presents to the Commission:

  • by 15 February of each year, funding for the implementation of the programme in the following year;
  • by 30 June of each year, a report on the measures laid down in this Regulation.

The Commission presents a general report on the impact of action carried out pursuant to this Regulation to the European Parliament and the Council by 31 December 2011.

Context

The first unique support framework for agriculture in the Aegean islands was presented in Regulation No 2019/93, which laid down specific supply arrangements and specific aid measures for certain sectors such as potatoes, vines and olive growing. In view of the success of this system, this Regulation aims at maintaining this aid whilst reinforcing partnerships with local authorities and giving them more freedom to manage funding.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 1405/2006

3.10.2006

OJ L 265 of 26.9.2006

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 615/2008

29.6.2008

OJ L 168 of 28.6.08

Regulation (EC) No 72/2009

7.2.2009

OJ L 30 of 31.1.09

The subsequent amendments and corrections to Regulation (EEC) No 1405/2006 have been incorporated into the basic text. This consolidated versionis only of documentary value.

Related Acts

Application procedure

Commission Regulation (EC) No 1914/2006 of 20 December 2006 laying down detailed rules for applying Council Regulation (EC) No 1405/2006 laying down specific measures for agriculture in favour of the smaller Aegean islands [Official Journal L 365 of 21.12.2006].

This Regulation contains the application procedure for measures in favour of the smaller Aegean islands. Concerning specific supply arrangements, it describes the function of administrative components such as the aid certificate and the register of operators, gives details of export conditions and explains the procedure for inspection and exports. With regard to measures in favour of local production, the Regulation describes how the amount of aid is determined, how applications are to be submitted and how aid is paid, as well as the principles governing inspections relating to the proper use of aid and sanctions.
See consolidated version

Transmission of information

Commission Regulation (EC) No 792/2009 of 31 August 2009 laying down detailed rules for the Member States’ notification to the Commission of information and documents in implementation of the common organisation of the markets, the direct payments’ regime, the promotion of agricultural products and the regimes applicable to the outermost regions and the smaller Aegean islands [Official Journal L 228 of 1.9.2009].

Application of certain EU competition rules to agricultural products

Application of certain EU competition rules to agricultural products

Outline of the Community (European Union) legislation about Application of certain EU competition rules to agricultural products

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

Application of certain EU competition rules to agricultural products

Document or Iniciative

Council Regulation (EC) No 1184/2006 of 24 July 2006 applying certain rules of competition to the production of and trade in certain agricultural products [See amending acts].

Summary

This regulation states that, except for certain exceptions detailed below, Articles 101 to 106 of the Treaty on the Functioning of the European Union (TFEU) (ex-Articles 81 to 86 of the Treaty Establishing the European Community (TEC)) apply to all agreements, decisions and practices referred to in Articles 101(1) and 102 TFEU (ex-Article 81(1) and 82 TEC) relating to the production of, or trade in, agricultural products.

There are three exceptions. These general rules do not apply to:

  • agreements, decisions and practices that form an integral part of a national market organisation;
  • agreements, decisions and practices that are necessary in order to attain the objectives of the common agricultural policy (CAP);
  • certain agreements, decisions and practices of farmers or farmers’ associations belonging to a single European Union (EU) country, provided such agreements do not introduce an obligation to charge identical prices, exclude competition or jeopardise the objectives of the CAP.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 1184/2006

24.8.2006

OJ L 214, 24.6.2006

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 1234/2007

23.11.2007

OJ L 299, 16.11.2007

Regulation (EC) No 361/2008

14.5.2008

OJ L 121, 7.5.2008

Regulation (EC) No 491/2009

24.6.2009

OJ L 154, 17.6.2009

Successive amendments and corrections to Regulation (EC) No 1184/2006 have been incorporated into the basic text. This consolidated versionis for reference only.

State aid in the agriculture sector

State aid in the agriculture sector

Outline of the Community (European Union) legislation about State aid in the agriculture sector

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > General framework

State aid in the agriculture sector

Document or Iniciative

Community guidelines for state aid in the agriculture and forestry sector 2007-13 [Official Journal C 319 of 27.12.2006].

Summary

The guidelines cover state aid in the agriculture and forestry sector for the period 2007-13 and replace the previous guidelines (2000-06) established for agriculture.

These guidelines apply to state aid granted for the production, processing and marketing of agricultural products. Annex I of the Treaty on the Functioning of the European Union (TFEU) provides a detailed list of the agricultural products included. They do not apply to the fisheries and aquaculture sector but, unlike the previous ones (2000-06), are applicable for aid for some forestry activities.

European Union (EU) countries are still obliged to notify the Commission of state aid for certain Annex I products that are not covered by a common market organisation (CMO), but the Commission may only make observations on the aid schemes. EU countries are invited to take on board these observations to avoid the risk of infringement procedures.

State aid is categorised in the guidelines as follows:

  • rural development measures;
  • aid for risk and crisis management;
  • other types of aid;
  • aid for the forestry sector.

RURAL DEVELOPMENT MEASURES

In line with Regulation (EC) No 1698/2005, which regulates EU support for rural development (the second pillar of the Common Agricultural Policy (CAP)), the guidelines set out the rules governing state aid for rural development measures or other closely related measures.

Aid may be authorised for investment in agricultural holdings in the following cases:

  • aid for investment in agricultural holdings proper;
  • aid for the conservation of traditional landscapes and buildings;
  • aid to relocate farm buildings where this is done in the public interest;
  • aid for necessary investment to improve the environment, hygiene conditions and animal welfare;
  • aid for additional costs due to investment made in EU countries to implement Directive 91/676/EEC;
  • aid for investment in compliance with applicable EU or national rules (only for additional costs incurred by young farmers to implement the rules within 36 months of their establishment).

Aid for investment in connection with the processing and marketing of agricultural products is authorised where it meets the conditions laid down in one of the following provisions:

  • Commission Regulation (EC) No 800/2008;
  • the Commission guidelines on national regional aid for 2007–13.

Environmental and animal welfare aid must meet the general objectives of EU environmental policy. This consists of the precautionary principle and the principles that preventive action should be taken, that as a priority environmental damage should be rectified at source and that the polluter should pay.

Aid to compensate for handicaps in certain areas must contribute to maintaining land use for agriculture, conserving rural areas and maintaining and promoting sustainable farming systems. To qualify for this aid, EU countries must demonstrate the handicaps in question and provide proof that the amount of aid avoids any overcompensation of these handicaps. The level of compensatory payments must be proportionate to the economic impact of the handicaps. Only the economic impact of permanent handicaps that lie outside human control may be taken into account for calculating the amount of compensatory payments.

Aid for meeting standards is designed to cover part of the costs incurred and loss of income as a result of applying standards in the fields of environmental protection, public health, animal and plant health, animal welfare and occupational safety.

Aid for the setting up of young farmers is for persons under 40 years of age who are setting up an agricultural holding for the first time as farm manager. Eligible beneficiaries may also submit a plan to develop their agricultural activities.

Aid for early retirement or for the cessation of farming activities is authorised subject to the conditions for permanent and definitive cessation of commercial farming activities.

Aid for producer groups aims to encourage the establishment of producer groups to concentrate their supply and adapt their production to market requirements. This aid is limited to small and medium-sized enterprises (SMEs). Eligible expenditure includes: rental of suitable premises, purchase of office equipment, including computer hardware and software, administrative costs (including staff), overheads and other expenses.

Aid for land reparcelling aims to support the exchange of plots of agricultural land and to facilitate the establishment of economically viable holdings. Aid may only be granted to cover the legal and administrative expenses involved in reparcelling up to 100 % of actual expenditure incurred.

Aid to encourage the production and marketing of quality agricultural products aims to improve the quality of agricultural products and to encourage farmers to participate in food quality schemes.

Under technical support in the agricultural sector, aid may be granted for the following measures:

  • education and training provided to farmers and agricultural workers;
  • replacement services to cover farmers’ absence due to holiday or sickness;
  • consultancy services provided by third parties;
  • organisation of forums to pool knowledge between enterprises and organisation of and participation in competitions, exhibitions or fairs;
  • publication of factual or scientific data;
  • publications.

Aid in the livestock sector targets support for the maintenance and improvement of the genetic quality of EU livestock.

Aid for the outermost regions and the Aegean islands aimed at meeting the needs of these regions will be examined by the Commission on a case by case basis, in accordance with the specific legal provisions applying to these regions, and with regard to the compatibility of the measures concerned with rural development programmes for the regions concerned.

RISK AND CRISIS MANAGEMENT

State aid may be granted to manage crises in the sector of primary agricultural production. However, distortions of competition must be avoided as far as possible. Requiring a minimum contribution from producers to losses or the cost of such measures provides an incentive for minimising risk. The following risk and crisis management measures are eligible for state aid:

  • aid to compensate for damage to agricultural production or the means of agricultural production;
  • aid regarding TSE (transmissible spongiform encephalopathies) and fallen stock;
  • aid towards the payment of insurance premiums;
  • aid for closing production, processing and marketing capacity.

Aid for rescuing and restructuring firms in difficulty will be assessed in accordance with the applicable EU guidelines on state aid for rescuing and restructuring firms in difficulty.

OTHER TYPES OF AID

Regulation (EC) No 800/2008 provides certain conditions under which aid for employment and aid for research and development are authorised.

There are horizontal aid instruments applicable to the agriculture sector. State aid for the agriculture sector is also covered by more general rules on the compatibility of aid with the TFEU, such as training aid (which is also covered by Regulation (EC) No 800/2008), state aid in connection with investment capital, state aid in the form of guarantees and state aid in the form of public service compensation.

Aid for advertising agricultural products may be authorised if the advertising campaign is centred on quality products – recognised EU designations (such as registered designation of origin – protected designation of origin (PDO) and protected geographical indication (PGI)) or for national or regional quality labels. Advertising campaigns must not be dedicated directly to the products of one or more particular company or companies.

Aid linked to tax exemptions under Directive 2003/96/EC may be granted by applying reduced or zero rates of taxation, provided that no differentiation is made in the agricultural sector. This covers products used as fuel for primary agricultural production or energy and electricity products used for primary agricultural production.

Aid in the form of subsidised short-term loans is no longer authorised.

AID FOR THE FORESTRY SECTOR

Up to now there have not been any specific EU rules governing state aid for the forestry sector. Aid could be granted under EU general rules for all sectors or under certain specific regulations. In the interests of transparency, the Commission has therefore sought to more clearly define EU policy on state aid for the forestry sector. However, the guidelines apply only to living trees and their natural environment in forests and other wooded land. They do not apply to state aid for forest-based industries, timber transport, wood processing or other forestry resources used as products or for the purpose of energy generation.

Aid in the forestry sector is authorised for the following purposes:

  • to contribute directly towards maintaining and enhancing the ecological, protective and recreational functions of forests, local biodiversity and a healthy forest ecosystem;
  • afforestation of agricultural and non-agricultural land, establishment of agri-forestry systems on agricultural land, Natura 2000 payments, payments for the forestry environment, restoring forest potential, introducing prevention systems, and non-productive investments;
  • to cover additional costs and loss of revenue linked to using more demanding environmentally friendly forestry techniques than those imposed by the rules, if the owners concerned undertake voluntarily to use these techniques and this commitment meets certain conditions;
  • to purchase forestry land, provided that the intensity of aid is within the limits set for aid for investment in agricultural holdings;
  • training for forestry owners and workers and for consultancy services provided by third parties;
  • setting up forestry associations;
  • support for initiatives to spread new techniques, pilot or demonstration projects under the conditions laid down in the chapter on technical assistance in the agricultural sector in the guidelines.

PROCEDURES

All new aid schemes and all new aid must be notified to the Commission before they are implemented, unless the aid is covered by one of the exemption regulations adopted by the Commission. In contrast to the guidelines for 2000-06, only aid schemes of limited duration are now authorised, with the maximum duration being seven years. These new guidelines apply from 1 January 2007.

EU countries must submit annual reports and the Commission reserves the right to request additional information.

These guidelines apply until 31 December 2013. However, the Commission reserves the right to amend them in the light of important considerations of competition policy, agricultural policy, human and animal health or in order to take account of other EU policies or international commitments.

BACKGROUND

The new guidelines form part of the 2003 reform of the CAP, which confirms the importance of rural development and shows the Commission’s concern to make aid granted by EU countries in the agriculture sector more coherent. The guidelines for the period 2007-13 are based on Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development, and in particular Articles 88 and 89 thereof, which contain specific provisions regarding state aid.